Is economic growth good for biodiversity? A critical response by Professor Mikkelson

Can economic growth be good for biodiversity? While it may seem surprising that there can be a positive link between the two, a recent section of The Economist magazine asserts that it can. Some of the reasons it lists include: as income rises, people can start focusing on luxuries (e.g. enjoying nature) rather than necessities; richer countries tend to have more efficient government regulation; and, agriculture yields are higher and fertility rates are lower in wealthier countries. Given the importance of biodiversity conservation, the editors at Quantdary decided to ask different McGill professors for their thoughts on the nature of the link between economic growth and biodiversity, as well as the quality of the evidence used in The Economist’s report. Below, we present an article written by our first respondent, Professor Gregory Mikkelson, from the Department of Philosophy and School of Environment at McGill University.

In a September 14th, 2013 “special report”, writers for the Economist argue that although past economic growth has brought life on Earth to the brink of mass extinction, future economic growth will solve this little problem. Because the evidence tells so strongly against this thesis, I dub it, and the arguments made on its behalf, the Economist’s “special fantasy”.

Corrected for inflation, the world economy more than doubled between 1980 and 2005. Meanwhile, the global average population size of wild vertebrate species declined by around 30% (Living Planet Report 2012). The deleterious effect of growth on biodiversity shows up also as a correlation, after correcting for other variables, between GDP/capita and the number of threatened species in different countries (Sustainability 5:432). This correlation would be even stronger, but for the fact that rich countries “export” so much of their ecological damage to poor countries, e.g., by importing products, such as “coffee, tea, sugar, textiles, fish and other manufactured items” that have “a biodiversity footprint that is larger abroad than at home” (Nature 486:109). Some of the Economist writers implicitly acknowledge this phenomenon, but none of them address it in any serious way. And they argue – but present no direct evidence – that biodiversity is faring better in rich countries than in poor.

The depletion and pollution of nature quantified by the “ecological footprint” – a key environmental indicator not mentioned in any of the Economist articles – sheds light on the connection between economic growth and biodiversity loss. Between 1980 and 2005, the total ecological footprint of humanity rose by two fifths, to nearly 1.5 Earth’s worth of regenerative and assimilative biocapacity. Technological efficiency improved, in the sense that the ecological footprint of a dollar of GDP declined by a bit more than a third. But the aforementioned more-than-two-fold growth in GDP far outpaced this decline. As the resulting “overshoot” of our planet’s ability to sustain us in the long term climbs ever higher, it bodes ill for our fellow species as well. Through both consumption and investment, the rich contribute far more, per capita, to this global overshoot than do the poor.

How does the Economist sustain its special fantasy about growth and biodiversity? Many of its arguments ascribe to economic growth virtues that it makes no obvious contribution to. For example, the improvement in technological efficiency discussed above probably drove per-capita GDP growth more than vice versa. Other arguments correctly attribute certain virtues to growth, but fail to acknowledge their eclipse by the harm caused by that growth. For example, it is true that countries with higher GDP/capita generally have lower rates of population growth. But in few, if any, cases has population growth slowed enough to offset the environmental damage caused by ramping up per-capita production and consumption in the first place.

Perhaps the most perverse aspect of the special fantasy is that it rests, in turn, upon another fantasy that empirical evidence has utterly refuted. This is the idea, invoked several times in the Economist articles, that nature is a “luxury good”. For a luxury good, the rich would be willing to pay a greater proportion of their income than would the poor. But it seems that all studies of willingness to pay for environmental protection – and in particular, biodiversity conservation – show exactly the opposite: the poor care more about nature, i.e., will to pay proportionally more to protect it, than the rich do. In technical terms, “the income elasticity of willingness to pay is less than one” (Environmental and Resource Economics 43:137).

Closely associated with the myth of nature as a luxury good is the idea of an “environmental Kuznets curve” (EKC). The Economist’s special fantasy is an application of this general idea, which their article “The Effects of Growth: The Long View” states as follows:

There appears to be an environmental version of the Kuznets curve, which describes the relationship between prosperity and inequality in an inverted U-shape. At the early stages of growth, inequality tends to rise; at the later stages it falls. Similarly, in the early stages of growth, biodiversity tends to suffer; in the later stages it benefits.

The funny thing (as if mass extinction could be funny) is that the weight of evidence contradicts even the original Kuznets curve: inequality has risen, not fallen, over the past several decades in most of the richest countries. In “Extinction: Dead as a Moa” the Economist states that the number of known bird and mammal extinctions has declined a bit over the same period, from 7 in the 1980’s to 3 in the 2000’s. I hope this is true. But taking into account orders of magnitude more data, the International Union for the Conservation of Nature reports that birds, mammals, and other well-studied groups like amphibians and corals “are moving towards increased extinction risk”, not away from it. The only study to date that has found non-monotonic relationships between GDP/capita and biodiversity loss shows the opposite of an EKC for most kinds of species, i.e., a non-inverted U-shape in which extinction risk first falls, but then rises, with GDP/capita (Conservation Biology 15:1021).

The Economist’s idea that economic growth is good for biodiversity thus indeed proves to be fantasy, founded on half-truths and still other, deeper fantasies clung to by mainstream economists in order to save their growth-obsessed ideology.